this post was submitted on 25 Jun 2026
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Micron locks in historically high memory prices for five years (www.theregister.com)
submitted 21 hours ago by ryper@lemmy.ca to c/technology@lemmy.world
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Memory-maker Micron has found a way to keep prices for its products sky-high for another five years, by signing 16 “strategic customer agreements” (SCAs) that include a floor price the company says comes with “a very robust gross margin for Micron, well above our peak quarterly margins in any past cycle.”

Micron CEO, president and chairman Sanjay Mehrotra explained the SCAs in prepared remarks delivered during the company’s Q3 earnings call. He explained that Micron has signed 16 SCAs, most of them covering 2026 to 2030, and that they involve a commitment to buy a certain quantity of product and pay for it in a pricing band that has a floor and a ceiling price. The floor price covers the historically high gross margins mentioned above, and the ceiling price means those who commit to an SCA are insulated if memory prices go even higher.

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[–] jj4211@lemmy.world 2 points 6 hours ago

When the bubble bursts I’m guessing at least a couple of the companies Micron signed SCAs with will fold and Micron won’t get anything.

This is the key. The plan for a lot of these companies is that only two outcomes exist, unimaginable success where being gouged hardly matters or just utter failure and the obligations go away in bankruptcy.

Alternatively, they just break the SCA and maybe pay some penalty less than their obligation otherwise would have been. I have seen companies sign agreements knowing up front they will break the agreements, but the contract penalties still make business sense.

I'm still waiting to see what happens when OpenAI decides to back out of some of their purchasing obligations. It's bound to happen, even if OpenAI does great. If folks think the tech sector is a bit wobbly the past few days, it pales in comparison to what such an announcement would do to the industry.